Is Bitcoin Similar to a Pyramid Scam? That’s what the same economist who predicted the pandemic says

April
26, 2021

4 min read

Every time the world is more divided between those who trust Bitcoin as a good investment, and those who do not believe even a bit in it. In the second group is the economist Nassim Taleb , who compares the most popular cryptocurrency to a pyramid scam scheme .

Of Lebanese origin, Taleb is famous for his 2007 book ‘The Black Swan’ , where he predicted a possible pandemic, which is already happening. Now, the essayist and researcher also gave his point of view on Bitcoin , and it is not encouraging at all.

In less than 2 weeks, Bitcoin lost about 26% of its value , perhaps its worst decline in the last year. On April 14, the cryptocurrency reached a record historical price of $ 64,339 per unit . However, this Sunday, April 25, it plummeted to $ 47,777 , according to data from CoinMarketCap .

^{Image: Behavior of Bitcoin from March 26 to April 26, 2021 according to data from CoinMarketCap .}

Faced with this dramatic loss in value, Nassim Taleb assured that Bitcoin is too volatile to be an effective currency and is not a safe protection against inflation.

“Basically, there is no connection between inflation and bitcoin. None. I mean, you can have hyperinflation and Bitcoin going to zero. There is no connection between the two, “ said the economist in an interview with CNBC .

The specialist in predicting possible catastrophes known as ‘black swans’ , pointed out that Bitcoin has characteristics similar to those of the Ponzi scheme , a type of pyramid fraud by stealing money from investors and disguising the scam by channeling returns.

“Something that moves 5% per day, 20% in a month, up or down, cannot be a currency. It’s something else, ” Taleb said, calling Bitcoin a “ trick ” and a “ game ” .

#Bitcoin and the $ USD . pic.twitter.com/cccOqeDnIk

– Bitcoin (@Bitcoin) April 26, 2021

Despite his current stance against it, the economist confessed that he was “initially misled” by Bitcoin . Thinking that it could eventually become an effective currency, it acquired a few units long ago, but said last February that it was ditching its cryptocurrencies due to their volatility.

“I bought it … I was not willing to have a capital appreciation, but I wanted to have an alternative to the fiat currency issued by central banks: a currency without a government. I realized that it was not a currency without a government. It was pure speculation. It’s like a game, (…) I mean, you can create a game and call it currency, ”he said.

“If you want to protect yourself against inflation, buy a piece of land. Grow, I don’t know, olives. You will have olive oil. If the price collapses, you will have something , ”Taleb added.

“The best strategy for investors is to own things that will produce returns in the future. In other words, you can use real dollars that come out of the company ” , recommended the specialist.